Investors with a 'seize the day' mentality may not be too interested in First Pacific. 'It's an interesting story but you need to be a long-term player,' Prudential-Bache analyst Sanjeet Devgan said. The conglomerate - which closed at HK$2.15 on Friday - has spent the time since the worst of the Asian crisis divesting itself of Hong Kong interests and focusing its investment strategy on Southeast Asia. Lehman Brothers analyst Philip Tulk said: 'In retrospect, the timing looks pretty bad. The original rationale was well thought out. They were investing in solid, defensive companies in two markets which were near their bottom, coming out of the depths of the Asian crisis. Both of these markets, particularly Indonesia, looked like they were climbing out of these difficulties but they've unfortunately fallen back.' Certainly, a company which has 65.1 per cent of its net asset value (NAV) tied up in Indonesia and the Philippines would not strike many as being an attractive investment. Indonesia fell into political and social chaos as a result of the Asian crisis and has shown few signs of pulling itself out. The Philippines looks little better. President Joseph Estrada stubbornly ignores calls for impeachment and clings to office despite having lost the mandate of most of the country's government and a sizeable proportion of the people. However, analysts said that in time First Pacific would not look too shoddy. 'I don't think the investments on a long-term view will turn out bad,' Mr Tulk said. 'We do believe that these are good quality defensive companies in the context of a local market, meaning that they will spit out a consistent amount of cash year in, year out.' The company's flagship investments are a controlling stake in Philippine Long Distance Telephone (PLDT) and a 47.6 per cent stake in Indonesian processed foods maker Indofood. Lehman Brothers underlines that they are both highly defensive and are solid cash generators, with Indofood's forecast earnings before interest, tax, depreciation and amortisation (ebitda) at US$350 million and PLDT's ebitda for this year forecast at $850 million to $900 million. However, especially in the case of the Philippines, the domestic operating environment is having a serious impact on First Pacific's NAV and stock price. The Philippine peso and stock market have suffered heavy losses this year. It is clear the market is hinging a lot on the removal of Mr Estrada. On November 6, driven by speculation the president was considering stepping down, the peso climbed 5.9 per cent against the US dollar, its biggest rise in seven years. That same day, the stock market surged 16.48 per cent, the biggest one-day gain in its history. Analysts said the depressed prices of PLDT and Indofood meant First Pacific was trading at a discount to its NAV. Lehman estimated this at 60 per cent to one-year forward NAV of HK$4.12. However, before First Pacific's true market potential can be realised, the political overhang will need to be cleared. Recent reports indicate this is still some way off. It is rumoured First Pacific will be removed from the Hang Seng Index when the review board next meets. Mr Devgan said: 'The funds which try to outdo the [index] would surely be rebalancing so it would be viewed as a negative.' The bad news could be about to get worse. On Friday, First Pacific was linked to accusations that Mr Estrada received HK$156 million in bribes over the PLDT sale - a charge the company has vigorously denied. Mr Devgan said: 'Unfortunately this has become rather prominent with President Estrada and anyone who is deemed to be associated with his wrongdoings would be penalised both by the stock markets and by the general public.'